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Tag: 2014 News

San Diego Company Settles Kickback Charges for $40 Million

CareFusion Corp agreed to pay $40.1 million to settle a federal government lawsuit accusing it of paying kickbacks to boost sales of a pre-surgical skin treatment, and marketing the product for unapproved uses. The accord announced by the U.S. Department of Justice and reported by Reuters Health, resolves allegations that CareFusion violated the federal False Claims Act by paying $11.6 million to a doctor to promote its ChloraPrep product to healthcare providers.

That doctor, Charles Denham, received the kickbacks while serving as co-chair of the safe practices committee of the nonprofit National Quality Forum, which makes recommendations on healthcare practices, the Justice Department said. “Corrupting the standard-setting process through kickbacks can affect the healthcare treatment choices that doctors and hospitals may make for patients,” Stuart Delery, assistant attorney general for the Justice Department’s civil division, said in a statement. The lawsuit also claimed that CareFusion promoted ChloraPrep from September 2009 through August 2011 for unapproved uses.

The U.S. Food and Drug Administration had approved ChloraPrep to prepare patients’ skin for surgery or injections.

CareFusion said on Thursday that it set aside funds for the settlement in the first quarter of 2013.Chief Executive Officer Kieran Gallahue said the San Diego-based company is pleased to settle, and has made “significant investments” to improve its quality and compliance practices, including in sales and marketing.

Denham could not immediately be reached for comment.

The accord resolved a whistleblower lawsuit first brought in September 2010 by Cynthia Kirk, a former vice president of regulatory affairs at a CareFusion infection prevention unit. She will receive $3.26 million through the settlement, which along with the lawsuit was unsealed this week by the federal court in Kansas City, Kansas.

The case is U.S. ex rel. Kirk v. CareFusion Corp et al, U.S. District Court, District of Kansas, No. 10-02492.

RAND Study Says Workplace Wellness Programs Ineffective

A long-running and well-respected workplace wellness program at PepsiCo that encourages employees to adopt healthier habits has not reduced healthcare costs, according to the most comprehensive evaluation of a such a program ever published. According to the story in Reuters Health, the new study was released on Monday in the journal Health Affairs was based on data for thousands of PepsiCo employees over seven years. The findings “cast doubt on the widely held belief” that workplace wellness programs save employers significantly more than they cost, conclude Soeren Mattke of the RAND Corporation and his co-authors. “Blanket claims of ‘wellness saves money’ are not warranted.”

Workplace wellness programs, a $6 billion-a-year industry, are a favorite of the business community because they promise to improve productivity, cut absenteeism and reduce medical costs by averting expensive illnesses. They aim, for instance, to help employees quit smoking, maintain a healthy weight and have regular screenings for elevated cholesterol, high blood pressure, cancer and other conditions, all of which are supposed to reduce healthcare spending. Half of U.S. employers with at least 50 workers offered a wellness program in 2012, as did more than 90 percent of those with 50,000-plus workers, according to a 2013 RAND report. PepsiCo’s was introduced in 2003.

The programs are also a pillar of the Affordable Care Act (ACA), President Barack Obama’s healthcare reform law. The ACA allows employers to reward workers who participate in wellness programs, and penalize those who refuse, with discounts or increases of as much as 30 percent of their insurance costs. That can be thousands of dollars per year.

Some workers have objected to the programs because of the penalties. Others say workplace wellness efforts invade their privacy and promote poor medicine. Last year, for instance, faculty members at Pennsylvania State University rebelled against a workplace wellness program whose “health risk assessment” asked, among other questions, whether male employees examined their testicles every month and whether women employees intended to become pregnant. They also protested its requirement that even healthy young adults receive frequent cholesterol and other screenings, which physicians recommend against, and the steep penalties for opting out: $1,200 a year.

“You’re making employees do something that invades their privacy and that goes against medical advice, and now we’re seeing (in the PepsiCo study) that it doesn’t even save the employer money,” said Al Lewis, founder and president of the Disease Management Purchasing Consortium International, which helps self-insured employers and state programs reduce healthcare costs.

For their study, RAND’s Mattke and his colleagues – including two PepsiCo executives – examined PepsiCo’s “Healthy Living” program, which has two components. One, called disease management, helps people with any of 10 chronic illnesses, among them asthma, diabetes and hypertension. They receive regular phone conversations with a nurse about managing the condition. Disease management produced healthcare savings of $136 per member per month, largely because of a 29 percent reduction in hospital admissions, the researchers found. When hypertension is well controlled, for instance, people are less likely to land in the hospital with a stroke. When asthmatics take their medication, they don’t wind up in the ER unable to breathe. PepsiCo’s disease management program “provides a substantial return for the investment made,” Mattke said.

The “lifestyle management component” is what most people think of as a workplace wellness program. It includes a health risk assessment in which workers answer questions about such behavior as eating and exercise habits; smoking cessation programs; and educational materials and telephone sessions with a “wellness coach” to help them lose weight, eat healthy, get fit, manage stress or stop smoking. PepsiCo employees who participated in these lifestyle programs reported a small reduction in absenteeism, but there was no significant effect on healthcare costs. (The study uses costs as a proxy for health, assuming that if people get sick they seek care. But it did not explicitly assess the programs’ effect on participants’ health.) “Participation in lifestyle management interventions,” conclude the PepsiCo researchers, “… has no statistically significant effect on healthcare costs,” and employers considering adopting such a program “should proceed with caution.”

The PepsiCo study is not the first to find that workplace wellness programs fall short of their promise. Last year, Mattke was the lead author of a RAND report that found that healthcare costs of workers who participated in such a program averaged $2.38 less per month than non-participants in the first year of the program and $3.46 less in the fifth year. Neither difference was statistically significant.

Researchers who are skeptical of wellness programs’ benefits are concerned that the ACA – “Obamacare” – allows employers to offer substantial financial rewards and penalties tied to something ineffective. “The ACA took a bad idea, workplace wellness programs, and turbocharged it by allowing employers to penalize workers,” said Lewis, co-author of a new e-book titled “Surviving Workplace Wellness.”

Proposed Medicare Regs Crack Down on Over Prescribers

Medicare plans to arm itself with broad new powers to better control – and potentially ban – doctors engaged in fraudulent or harmful prescribing. The U.S. Centers for Medicare and Medicaid Services (CMS) described the effort late Monday in what’s known as a proposed rule, the standard process by which federal agencies make significant changes. Two of the changes mark a dramatic departure for the agency, which historically has given much higher priority to making medications easily accessible to seniors and the disabled than to weeding out dangerous providers.

For the first time, the agency would have the authority to kick out physicians and other providers who engage in abusive prescribing. It could also take such action if providers’ licenses have been suspended or revoked by state regulators or if they were restricted from prescribing painkillers and other controlled substances.   And the agency will tighten a loophole that has allowed doctors to prescribe to patients in the drug program, known as Part D, even when they were not officially enrolled with Medicare. Under the new rules, doctors and other providers must formally enroll if they want to write prescriptions to the 36 million people in Part D. This requires them to verify their credentials and disclose professional discipline and criminal history.

Currently, Medicare and the private insurers that run Part D know little about those writing the prescriptions – even those whose yearly tallies cost millions of dollars or who prescribe high volumes of inappropriate drugs.  ProPublica found that some of the doctors had been criminally charged or convicted, had lost medical licenses or had been terminated from state Medicaid programs serving the poor.

The changes would take effect Jan. 1, 2015. As part of the process, CMS will accept public comments until March 7 and could revise the proposals based on the feedback. Undoubtedly, the new rules would require some patients to change doctors – or force some doctors to apply to be part of Medicare. Among the changes Medicare proposes giving its outside fraud contractor the ability to more easily investigate suspicions of fraud. Currently, the contractor cannot directly access patient medical charts to assess whether the patient actually saw the doctor or had a condition that warranted the medication.  The contractor must go back to the insurers, which then request the records from doctors or pharmacies. Under the rule change, the contractor would be given the power to access the records directly. The inspector general of the U.S. Department of Health and Human Services has repeatedly pressed Medicare to make this change.

Medicare also proposes whittling down its list of “protected drug classes,” vital drugs for which insurers cannot impose restrictions on use. The agency wants to remove antidepressants and immunosuppressant drugs from this list, giving insurers more latitude to require patients receive prior approval before receiving certain brand-name medicines. The agency also said it may remove protection from antipsychotics, which can be inappropriate for seniors with dementia, after 2015.

Citation to Treatment Guideline Required to Award Home Health Care

The applicant, Elvin Salguero sustained an admitted injury consisting of partial amputation of his left fourth and fifth fingers and other body parts. After several hearings, the WCJ determined that the defendant had lost treatment control and that the claimant was entitled to treat with his free choice treater, Dr.Fred Hekmat. The case was resolved with a compromise and release to disputed body parts, and a stipulated award to 53% regarding the left 4th and 5th finger and psyche, with provision for future care for these admitted body parts.

With regard to the disputed claim for home care, the documentary record at the trial showed that the applicant was psychiatrically hospitalized at Brotman Medical Center after verbalizing intent to kill himself by jumping off a freeway overpass. More specifically, the report of his secondary psychiatric treater, Elena Konstat Ph.D., noted a significant suicide risk and significant depression in recommending a psychiatric hospitalization.

After his discharge, Konstat reported that Salguero “must remain in a safe and controlled environment closely monitored for his well-being. Therefore, 24/7 home cares [sic] assistance, and transportation to all medical appointments is recommended. Mr. Salguero is taking potent medication, and should not drive himself as he maybe [sic) a danger to himself, or others. In addition, his medications should be provided by preferably an LVN, or Psychiatric Technician.” After reviewing this report, the PTP stated that “”Based upon these further records from Dr. Konstat, I feel that certainly the patient requires the following: … [Par.] The patient requires 24/7 home care assistance by a psyche technician or LVN which is necessary to cure and relieve Mr. Salguero from the effects of his orthopaedic injury.” No UR report or other competent medical evidence was prepared in response to any of the reports discussed above, at least with regard to the home care request.

The case went to expedited trial on the limited issues of applicant’s request for authorization of a hand surgeon referral, stellate blocks and 24/7 home care. On cross-examination, he stated that he wanted to kill himself and had a specific plan to do this. Nonetheless, the WCJ found that good cause had not been shown to authorize his request for 24/7 home care. The applicant’s reconsideration petition as to the home care issue followed. The WCAB affirmed the denial in the panel decision of Elvin Salguero v Charles Gemeiner Cabinets and Insurance Company of the West.

The California Supreme Court has recently made clear that “[N]otwithstanding whatever an employer does (or does not do), an injured employee must still prove that the sought treatment is medically reasonable and necessary. That means demonstrating that the treatment request is consistent with the uniform guidelines (§ 4600, subd. (b)) or, alternatively, rebutting the application of the guidelines with a preponderance of scientific medical evidence. (§ 4604.5)” (Sandhagen v. WCAB, 73 CCC 981, 990.).

The Board has applied this principle to deny authorization for a given modality of care even where the defendant has neglected to carry out timely UR review. In Garcia v. Souplantation, 2011 Cal. Wrk. Comp.P .D. LEXIS 116, a request for authorization of epidural injections which was never rebutted via UR review was nevertheless held insufficient to support a need for such procedures where the ACOEM guidelines disfavored such a procedure and the treater requesting authorization never explained any basis for deviating from these guidelines. In Chairez v. Cherokee Bindery, 2012 Cal.Wrk.Comp.P.D. LEXIS 506, an award of 24/7 home care was reversed, mainly because of an unclear record. However, the board panel instructed the trial judge on remand that “In addressing the issue of home health care as medical treatment, the WCJ should consider that even if it is determined that a utilization review is untimely or otherwise invalid, the applicant still has a burden of proving that the requested treatment conforms with the requirements of Labor Code section 4604.5 by showing that it is in accord with the appropriate guidelines, or by rebutting the presumption of reasonableness of treatment in accord with those guidelines, or by showing that a variance from those guidelines is reasonably required to cure and relieve applicant from the effects of his industrial injury. [Sandhagen cited.] In short, an untimely or improper utilization review does not automatically require issuance of an award of the requested treatment. Instead, it must also be shown by applicant that the requested treatment is within the applicable guidelines or is otherwise reasonable medical treatment.”

There was no reference to any treatment guidelines or discussion of such guidelines in any of the reports submitted in this case. Dr. Konstat’s rather unusual request for 24/7 home care as a modality of care for severe depression. There is no mention of any such modality of care in Chapter 15 of the ACOEM guidelines regarding stress complaints.

Feds Launch Biggest Social Security Disability Fraud Busts in History

The Wall Street Journal reports that federal and local investigators plan to arrest 106 people today as part of one of the largest Social Security disability fraud busts in U.S. history. Several dozen arrests had been made early Tuesday. In addition to 102 Social Security disability beneficiaries, authorities are expected to arrest four people who helped them navigate the disability application process and coach them on how to get benefits, the person said. This includes one lawyer, one disability consultant, and two “recruiters,” the person said.

Federal and local prosecutors are expected to allege that scheme led to $24 million in fraudulent disability payments, the person said. A second person familiar with the arrests said the defendants claimed they were “unable to work at any job or leave their homes but had very active lives.”

The arrests come less than six months after federal and local authorities arrested more than 70 people in Puerto Rico on disability fraud charges. A former Social Security employee allegedly helped former employees at a pharmaceutical plant there obtain benefits.

The Social Security Administration is under pressure from Congress to explain what it is doing to tighten up the disability application process following a number of recent scandals. The Social Security Disability Insurance program has close to 11 million beneficiaries, and workers must prove they have physical or mental health problems that prevent them from working. The program has grown so quickly that it could have to begin cutting benefits for all recipients in 2016 unless Congress intervenes.

The New York Times now reports that eighty retired New York City police officers and firefighters are now charged. Scores of those charged in the case essentially stole in plain sight, according to a 205-count indictment and a bail letter, collecting between $30,000 and $50,000 a year based on fabricated claims that they were completely incapacitated by serious psychiatric disorders. Many said that their actions in response to the Sept. 11, 2001, terrorist attacks were responsible for their psychiatric conditions, such as post-traumatic stress disorder, anxiety or depression.

But their Facebook pages and other websites, according to the court papers, tell a starkly different story. Photographs culled from the Internet that show one riding a jet ski and others working at jobs ranging from helicopter pilot to martial arts instructor. One is shown fishing off the coast of Costa Rica and another sitting astride a motorcycle, while another appeared in a television news story selling cannoli at the Feast of San Gennaro on Mulberry Street in Manhattan. Prosecutors charge that they were coached by the scheme’s organizers to appear disheveled and disoriented during interviews, in which doctors initially evaluated their disability applications before finding them to be mentally disabled and incapable of any work whatsoever.

WCAB Limits Discovery of Psychiatric Records

Kelly Snow filed an Application for Adjudication of Claim against her employer, Health Net, alleging that she sustained an industrial injury to her upper extremities, wrist, shoulders and back. She later filed an amended Application, alleging additional injury to her psyche. She apparently disclosed in her deposition that she had been treated by Ms. Bradley, a Licensed Clinical Social Worker in the past.

Defendant attempted to obtain the records of Ms.Bradley and to depose her, contending that these records are relevant to causation of the alleged psychiatric injury and apportionment of permanent disability caused by that injury. The workers’ compensation administrative law judge (WCJ) denied applicant’s Petition to Quash Subpoena Duces Tecum, denied applicant’s Petition to Quash the Deposition of J. Bradley, LCSW; and ordered applicant to sign a release for the records of J. Bradley, LCSW and ordered the deposition to go forward. Applicant filed a timely, verified Petition for Removal, requesting that the Appeals Board rescind the Orders. Removal was granted in the panel decision of Kelly Snow v Health Net.

Applicant contends in her Petition that both she and Ms. Bradley may assert and have asserted the psychotherapist-patient privilege and refused to disclose confidential communications between them; and that because Ms. Bradley is neither a physician nor a psychologist, pursuant to Labor Code section 3209.3(a) and (b), her records cannot be reviewed by an evaluating qualified medical evaluator (QME), pursuant to Administrative Director Rule 35(a)(l) and (2) (Cal. Code Regs., tit. 8, § 35(a)(l) and (2)) and therefore are not discoverable.

The WCAB concluded that as to whether the records of Ms. Bradley can be provided to the QME for review, Rule 35(a)(5) provides that “[n]on-medical records … which are relevant to determination of medical issue(s) in dispute” may be provided to a QME. Even though Ms. Bradley is not a physician pursuant to section 3209.3( a) and (b ), her records and her testimony are “non-medical records” and may be sent to the QME.

As to the psychotherapist-patient privilege, as a licensed clinical social worker, Ms. Bradley is a “psychotherapist” pursuant to Evidence Code section 1010(c). Applicant is the “holder of the privilege” pursuant to Evidence Code section 1013(a). Both she and Ms. Bradley may claim the privilege to refuse to disclose confidential communications between them, pursuant to Evidence Code section 1014(a) and (c). However, Evidence Code section 1016 provides: “There is no privilege under this article as to a communication relevant to an issue concerning the mental or emotional condition of the patient if such issue has been tendered by: (a) The patient.”

However, the waiver contemplated by Evidence Code section 1016 may not be a complete waiver of the privilege but only a limited waiver concomitant with the purposes of the section. As the Supreme Court stated In re Lifschutz (1970) 2 Ca1.3d 415 that the patient is not obligated to sacrifice all privacy to seek redress for a specific mental or emotional injury; the scope of the inquiry permitted depends upon the nature of the injuries which the patient-litigant himself has brought before the court.

The WCAB noted that in this case, Ms. Bradley wrote a letter to the process server of the SOT for her records, stating: “The records that I have regarding the above named precede the accident of March 14, 2011 by a number of years. As these records do not relate to this event or injuries, I do not feel comfortable in releasing her private information.” Therefore, there is an issue as to whether the records of Ms. Bradley relate to the mental conditions that applicant has disclosed in this case or whether they relate to “other aspects of [her] personality,” in which case disclosure may not be compellable. For this reason, the WCJ in his Report and Recommendation recommended that the WCAB grant applicant’s petition so that there can be further consideration of whether some or all of Ms. Bradley’s records may still be privileged, despite applicant’s allegation of injury to psyche in her injury of March 11, 2011.

Thus the WCAB agreed with the Recommendation of the WCJ and granted removal, rescinded the Orders dated June 19, 2013, and returned the matter to the trial level for further proceedings.

WCIRB Report Analyzes Increase in Claim Frequency

The WCIRB has released a report analyzing the elevated level of indemnity claim frequency that has persisted in California since 2010 and run counter to indemnity claim trends in other states. The Analysis of Changes in Indemnity Claim Frequency – 2013 Report, which is available on the WCIRB website (, identifies possible factors influencing the 2012 indemnity claim frequency increase and compares them to those factors impacting the 2010 increase.

Among the findings of the report are:

  • While the 2010 indemnity claim frequency increase was experienced in many states, the 2012 frequency increase appears to be unique to California.
  • Both the 2010 and 2012 frequency increases appear to be influenced by an increase in the number of late-reported indemnity claims and cumulative injury claims.
  • The 2012 increase in cumulative injury claims was focused primarily on permanent disability claims and claims involving injuries to multiple body parts. In contrast, the 2010 increase was spread across many types of injuries.
  • The 2010 indemnity claim frequency increase was significantly dampened by the impact of shifts in industrial mix towards less hazardous employments. In 2012, as the economy recovered in more hazardous industries such as construction and manufacturing, shifting industrial mix tended to slightly increase claim frequency.
  • While the 2010 indemnity claim frequency increase was generally experienced across all California regions, the 2012 increase was experienced primarily in the counties in and around the Los Angeles basin.
  • The economic recovery that continued through 2012 resulted in a higher number of newer workers in the labor force, and newer workers are often more likely to suffer a workplace injury.
  • A significant portion of the 2010 indemnity claim frequency increase was experienced in smaller indemnity claims that may have been medical-only in the past. Preliminary information suggests that the 2012 increase was more heavily concentrated in larger claim sizes.

The full report is available in the Research and Analysis section of the WCIRB website.

Fullerton Business Owner Gets Five Year Sentence in Fraud Case

The Orange County Register reports that a Fullerton tree-trimming business owner who filed workers’ compensation insurance claims for one worker killed in a wood chipper and a second seriously injured in an on-the-job vehicle accident–despite never having paid premiums for the employees–was sent to prison for five years.

Jose Luis Guerrero, the 45-year-old owner of Jose Martinez Tree Service Inc., had pleaded guilty to under-reporting more than $2 million in payroll to the State Compensation Insurance Fund between March 2005 and March 2009.

It was a review of the Nov. 7, 2007, wood-chipper death of Gabriel Gonzalez by State Compensation Insurance Fund officials that uncovered the widespread fraud, according to Deputy District Attorney Debbie Jackson. For four years beginning in March 2005, Guerrero under-reported his payroll to the state insurance fund by more than $2 million so he would have to pay less in workers’ compensation insurance premiums, according to the Orange County District Attorney’s office, which also accused him of illegally paying some of his employees in cash.

Guerrero pleaded guilty Dec. 20 to 20 counts of intent to evade taxes, four counts of false or fraudulent statements to reduce premiums, and two counts of making fraudulent statements to obtain or deny compensation, all felonies.

He also admitted to sentencing-enhancement allegations for aggravated white collar crime between $100,000 to $500,000 and theft exceeding $150,000, and also pleaded guilty to misdemeanor possession of an assault weapon.

DWC Post s RBRVS Fee Schedule Updates Effective January 1, 2014

Pursuant to Labor Code section 5307.1(g)(2), the Division of Workers’ Compensation (DWC) has issued an Administrative Director Order posting adjustments to the Resource Based Relative Value Scale (RBRVS)-based physician services and non-physician practitioner services section of the official medical fee schedule (OMFS) to conform to changes in the 2014 Medicare payment system as required by Labor Code section 5307.1. The update order includes adoption of the 2014 relative value units, the 2014 CPT codes, and updated conversion factors (including the Medicare Economic Index and relative value scale adjustments). The changes take effect January 1, 2014.

In accordance with SB 863, the Acting Administrative Director conducted a rulemaking action and adopted the new physician fee schedule based upon the RBRVS. The regulations were filed with the Secretary of State for publication in the California Code of Regulations on September 24, 2013. Thereafter, amendments to the regulations were adopted to amend the RBRVS-based fee schedule to eliminate use of the federal Office of Workers’ Compensation Program (OWCP) relative value units because the structure of the OWCP data file would result in erroneous fee calculations for 21 procedures. (A total of 81 procedures that would have been priced using OWCP values will instead be paid By Report.) The amended regulations were adopted on December 13, 2013 and submitted to the Office of Administrative Law to be effective January 1, 2014.

The RBRVS-based fee schedule for physician and non-physician practitioner services (based on the regulations and the update order) is posted on the DWC official medical fee schedule webpage. The regulations and update order are effective for services rendered on or after January 1, 2014.

More information and the adjustments to the physician services and non-physician practitioner services section of the OMFS can be found on the DWC OMFS page.